ILA, USMX talks break down, 'container cliff' in the making

Wednesday, December 19, 2012

Shipper concern over the economic fallout that would result from a strike at U.S. East and Gulf coast ports is growing, after the abrupt breakdown in contract talks between the International Longshoremen's Association and employers represented by the U.S. Maritime Alliance (USMX) on Tuesday.
According to USMX, at a meeting in Newark, N.J., “the Federal Mediation and Conciliation Service (FMCS) recommended a short contract extension to keep both parties at the bargaining table.
“While USMX agreed to the extension, the ILA rejected it, refusing to discuss any changes to the status quo on container royalty and renewing its
vow to strike,” the employer group said.
Jay Timmons, president and chief executive officer of the
National Association of Manufacturers, said “a labor strike of the East
and Gulf Coast ports would be a devastating blow to manufacturing supply
chains and halt exports of U.S.-manufactured goods. This spells bad
news for manufacturers and the millions of men and women who work
directly in manufacturing and heavily depend on trade to remain
competitive and to support jobs."
Jonathan Gold, vice president for supply chain and customs policy at the National Retail Federation, said the failure of the two sides to reach an agreement was "extremely disheartening" and urged them "to remain at the table until a deal is reached.
“The last thing the economy needs right now is another strike, which would impact all international trade and commerce at the nation’s East and Gulf coast container ports," he added. "This is truly a ‘container cliff’ in the making. The retail industry, once again, calls on President Obama to engage directly in the negotiations. The president should utilize all available tools, including Taft-Hartley, to eliminate even the threat of a strike or lockout. The time for leadership is now.”
USMX also released a summary of a proposal that was rejected by the union on Dec. 10, which offered a six-year contract that would have provided two $1-per-hour wage increases over the course of the agreement, boosting the ILA’s average hourly rate to over $55, including overtime and container royalty.
“USMX and its members are disappointed with the breakdown of negotiations and the inflexible stance that the union’s leaders have maintained over the nine-month course of these talks,” said James A. Capo, USMX chairman and chief executive officer. "It is especially disheartening given the history of cooperation that in the past has characterized negotiations with the ILA and, since 1977, has resulted in nine new agreements without a single strike or coast-wide work stoppage.”
USMX has said it wants to cap container royalties, payments based on the weight of containerized cargo and use the excess, “not as savings for employers, but to help pay for other benefits for ILA workers.”
Benny Holland Jr., executive vice president of the ILA, said the union told management it was "willing to extend the contract to Feb. 1 and keep talking if management would be willing to take the container royalty cap off the table and we could show them other ways to accommodate them with other adjustments that would offset" the royalties.
"They refused, so right now unless we hear back from them we will be on strike on Dec. 29," he said.
USMX said the container royalty payments were established in 1960 as a way to protect members of the ILA in New York from job losses created by containerization and automation.
In its most recent offer to the union on Dec. 10, USMX said it had proposed protecting container royalty payments at 2011 levels for current recipients for 25 years or until they leave the industry, whichever occurs first. New employees would not be eligible for container royalty payments.
But Joe Curto, president of the New York Shipping Association and a USMX director, noted this was not a final offer, and USMX was willing to further discuss this with the union.
USMX said container royalty payments amounted to $211 million in 2011, an average of $15,500 for ILA workers at the 14 East and Gulf coast ports.
In a press release posted on its Website, the ILA said it was willing to negotiate past Dec. 29, because it “knew there was a lot of negotiating work in front of them and that many issues required time and effort to resolve.”
But the union said the issue of container royalty “was considered untouchable by the union. So they proposed to USMX that the current contract extension be moved from December 29th to February 1, 2013 provided that management takes the container royalty issue off the table.”
The ILA even hinted that it would become more flexible in negotiations involving other sticky issues with the month’s extension, but USMX said no.
“USMX seems intent on gutting a provision of our Master Contract that ILA members fought and sacrificed for years to achieve,” said ILA President Harold J. Daggett. “We have repeatedly asked them to leave this item alone – it was a hard won gain by ILA members and a wage supplement achieved through hard fought negotiations.”
The ILA said it “still hopes USMX prevents a strike on December 30th by agreeing to the extension.”
Dave Adam, senior vice president and chief operating officer of USMX, said "employers are willing to continue to bargain in good faith," but the ILA's demand that the container royalty cap be taken completely off the table "was not acceptable."
Curto noted "there are still a few more days in this month where we would be willing to continue discussions."
FMCService Director George H. Cohen, who was at the meeting at the Marriott Hotel at Newark Liberty International Airport, declined to comment.
Meanwhile, USMX offered this summary of its Dec. 10 proposal, which was rejected by the ILA:

Term of agreement:

USMX offered a six-year agreement, which provides stability and security for ILA members.

Tentative agreements had been reached on three major concerns of the ILA:

New technology and automation – Provides for protection of individuals who may be displaced as a result of the implementation of new technology.

Chassis maintenance and repair – Work preservation provisions promote continued ILA jurisdiction of chassis maintenance and repair work within the marine terminals and port areas covered by the Master Contract.